Risk Management

Definition
Reducing a company’s vulnerabilities through the anticipation, monitoring and mitigating of potential risk in order to preserve shareholder value

One type of risk, which until recently was not considered an important area of focus, is “Reputation Risk”. This risk type is associated with the potential decline of a company’s reputation in the eyes of its constituencies -- shareholders, vendors, customers, employees, pollsters, and the media.

The damage done by negative reputation can seriously threaten a company’s performance or even its survival.

Current Context

• 71% of adults in the United States think that corporate America’s reputation is either “not good” or “terrible” (2004 Harris Interactive Poll)
• 62% of companies think that reputation risk is more difficult to manage than other types of risk  (2003 Economist Intelligence Unit Survey)
• 2000 participants at the 2004 World Economic Forum said that corporate reputation, not profitability, was the most important measure of success for their companies

Recommendations

• Advise Board on developing plans for risk mitigation contingencies and execution
• Identify specific threats for the company, its key divisions, and business units
• Develop a Rapid Response Communication Plan
• Up-date Board and constituencies regularly

(In addition to Reputation Risk, BrinkPoint Consulting advises on all types of non-financial risk management associated with Boards of Directors.)

See how CEOs rank different types of risk